Without the activity of “trolls,” also known as patent assertion entities, venture capital investment would have grown by at least $8.1 billion over five years, according to the report by MIT professor Catherine Tucker. (CCIA has been a proponent of legislation to overhaul the patent litigation system.) The study says there’s a direct link between lawsuits by frequent patent litigators — which is how the study defines “patent trolls” — and decreased venture capital investment.

It’s not what Tucker expected to find.

“You hear a lot of stories on both sides, right?” like how patent assertion entities harm innovation or help innovation, she said in an interview with Technocrat.

She said she thought the two sides would balance each other out. Perhaps she wouldn’t see anything in the data. But she found a “stark” negative effect, she said.

The study also estimates how much higher venture capital investments would be over a five-year period if it weren’t for lawsuits by frequent litigators and found a “95% confidence interval for this estimate, which was between $8.1 billion and $41.8 billion.”

The study also looked at non-frequent patent litigators and found that venture capital investment “initially increases with the number of litigated patents, but that there is a ‘tipping point’ where further increases in the number of patents litigated are associated with decreased VC investment.”

The study was measuring the average level of venture capital investment in a district for a particular product sector, Tucker said.

When looking at sectors, the study also found that what it called an “inverted U-shaped relation between patent litigation and VC investment” looks to be “strongest for technology patents, and negligible for products such as pharmaceuticals.”

The report says that in industries where “patents traditionally apply to a single molecule, as is the case in pharmaceuticals or chemical processes, there is less effect on VC investment, perhaps reflecting the lower degree of ambiguity that surrounds patents in such industries.”

On the study’s findings of differences across different sectors, Tucker said she didn’t want to over-interpret her data, but said technology patents are vague and give more room for excessive patent litigation.

The study also notes:

As the time span of our data finishes in 2012, and as we focus on the product sector that the patent is initially tied to rather than the industry of the defendant in the case, we are not able to evaluate claims of harm to Main Street businesses and service providers, a topic which has recently featured in policy discussions. These cases span a variety of industries, though often featuring a piece of reasonably ubiquitous technology. For example, White Castle, a fast food chain, was targeted by a lawsuit over its use of Quick Response (QR) codes.

The study’s recommendation for policymakers: higher quality patents and “improvements in the patent litigation system which address the potentially harmful effects of such litigation,” like making changes to “the current way that litigation costs are allocated; at present, there exist low barriers to bringing a lawsuit and currently defendants bear disproportionate risks and costs of being involved in patent litigation relative to plaintiffs.”